SEBI proposes simplified rules for high-value debt listed entities
SEBI has proposed a framework to reduce the compliance burden of companies with large debts, by raising the threshold for identifying High Value Debt Listed Entities (HVDLEs) to ₹5,000 crore from the current ₹1,000 crore. The move would reduce the number of entities classified as HVDLEs from 137 to 48, effectively bringing down around 64% of companies currently falling under the category.
The proposal aims to reduce the compliance burden and promote ease of doing business.
Corporate governance norms for HVDLEs were first introduced in September 2021, on a comply-or-explain basis until March 31, 2025, and became mandatory from April 2025. These norms apply to all entities with listed outstanding non-convertible debt securities of ₹1,000 crore or more.
Following the rollout of these rules, several market participants approached SEBI seeking a higher threshold for classification. Once designated as an HVDLE, a company is required to comply with governance standards similar to those of equity-listed firms, including the submission of quarterly governance reports, annual secretarial compliance reports, and adherence to board composition norms.
In the feedback from market participants, it was noted that the current ₹1000-crore threshold is disproportionately low for large debt issuers, leading to regulatory burden.
For instance, the top 50 non-banking financial companies (NBFCs) have an average annual borrowings in the range of ₹10,000 crore to ₹40,000 crore. The current threshold is just 2-10 percent of their annual borrowing programme. This does not constitute a ‘high-value’ in the current market environment.
Alongside the threshold proposal, SEBI has suggested aligning corporate governance norms for HVDLEs with those of equity-listed entities. This includes revisions in related-party transaction (RPT) rules, board composition, and secretarial audit requirements.
Other relaxations being considered include exemption from obtaining shareholder approval for nominee directors of financial sector regulators or those appointed by court or tribunal. It also includes conditional relief in filling up vacancies of key staff, and exemption from the requirement of shareholder approval for sale of assets of a material subsidiary to another, as long as the assets are within the group. Further clarification on shareholder approval requirements for directors over 75, easing compliance timelines for board committee vacancies, and standardising disclosure formats.
Comments may be submitted on SEBI consultation paper by 17th November, 2025.
